CNA Insider Interview: How China and Japan's Competition Will Shape Southeast Asia
Channel News Asia's Insider Program covers the progress of Japan’s Indo-Pacific Plan. Geopolitical competition is heating up in the Indo-Pacific Region. Japan’s Free and Open Indo-Pacific Plan (FOIP) is investing in infrastructure to alleviate the economic bottlenecks in ASEAN countries. In Indonesia, it’s building the country’s first MRT project. In Vietnam, it has invested in a network of roads, rail, ports and energy infrastructure. And in the Philippines, it's investing in a flood mitigation project. With rising geopolitical tensions between the US and China, has Japan created enough political clout in the region?
Despite being the front-runner in the Jakarta-Bandung High Speed Train project, Japan failed to secure the project. Christine Susanna Tjhin, Director of Strategic Research at the Gentala Institute, explains the competition between China and Japan during the negotiation. Indonesian government’s quick decision to choose China actually surprised the Chinese authority. Among the important reasons for the decision are the financial factor and the technical factor.
On the financial factor, China offered lower costs, better ownership arrangement (60% ownership for Indonesia) through joint venture, and no government financial guarantee necessary. Japan offered higher project cost, no government ownership and require financial guarantee from the government.
On the technical factor, China offered technological transfer and training for local engineers, whereas Japan was being unclear on technological transfer or the availability of training.
During the G20 meeting in Bali, the US, Japan and other allies offered the Just Energy Transition Partnership to help with Indonesia in climate change program. An estimated 20 billion dollars public and private financing will be mobilized in over 3-5 years.
According to Christine, the JETP is indeed an important initiative to be supported and it has the potential to help Indonesia’s effort to secure green development domestically. The main concern is on how to effectively integrate this program to Indonesia’s overall restructurization and reform in the energy sector.
Japan’s FOIP can act as a counter-balance in the time of heightened US-China rivalry. A constructive competition between Japan and China can be useful for the region. Regional economic partnership is an important factor.
Christine believes that the existing multilateral framework have allowed Japan to cooperate with China together with countries in the region. Most importantly is Indonesia’s leadership in pushing for an ASEAN-based centrality for these regional frameworks, that not only will ensure regional stability, but also will broaden regional cooperation and include both Japan and China, as well as the US eventually.
On the financial factor, China offered lower costs, better ownership arrangement (60% ownership for Indonesia) through joint venture, and no government financial guarantee necessary. Japan offered higher project cost, no government ownership and require financial guarantee from the government.
On the technical factor, China offered technological transfer and training for local engineers, whereas Japan was being unclear on technological transfer or the availability of training.
During the G20 meeting in Bali, the US, Japan and other allies offered the Just Energy Transition Partnership to help with Indonesia in climate change program. An estimated 20 billion dollars public and private financing will be mobilized in over 3-5 years.
According to Christine, the JETP is indeed an important initiative to be supported and it has the potential to help Indonesia’s effort to secure green development domestically. The main concern is on how to effectively integrate this program to Indonesia’s overall restructurization and reform in the energy sector.
Japan’s FOIP can act as a counter-balance in the time of heightened US-China rivalry. A constructive competition between Japan and China can be useful for the region. Regional economic partnership is an important factor.
Christine believes that the existing multilateral framework have allowed Japan to cooperate with China together with countries in the region. Most importantly is Indonesia’s leadership in pushing for an ASEAN-based centrality for these regional frameworks, that not only will ensure regional stability, but also will broaden regional cooperation and include both Japan and China, as well as the US eventually.
Youtube Link: https://youtu.be/76bMzUrJKIg.
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